Archer-Daniels-Midland (ADM): A Bull Case Theory

We came across a bullish thesis on Archer-Daniels-Midland on Pellom Value Investments’s Substack by Tyler Pellom. As of 2ⁿᵈ July, Archer-Daniels-Midland’s share was trading at $54.45. ADM’s trailing and forward P/E were 19.17 and 13.07 respectively according to Yahoo Finance.

Archer-Daniels-Midland (ADM) is a global leader in human and animal nutrition and a premier agricultural origination and processing company. Its vertically integrated model spans Ag Services & Oilseeds, Carbohydrate Solutions, and Nutrition, allowing ADM to manage agricultural commodities from sourcing and storage through processing and sale. This structure provides unparalleled capabilities to meet global demands driven by fundamental trends like food security, health and well-being, and the sustainability of the agriculture and food value chains.

The company’s diverse segments, including the higher-margin Nutrition business, contribute to overall business resilience. While the Ag Services & Oilseeds segment operates on high-volume, lower-margin dynamics tied to fluctuating commodity prices, ADM’s profits have trended upwards over the long term. The essential nature of its business, providing access to nutrition worldwide, creates a positive structural tailwind from growing global food consumption. ADM has a remarkable track record of returning value to shareholders through dividends, having raised its dividend for 52 consecutive years and maintaining a history of uninterrupted dividend payments spanning 92 or 93 years.

The investment thesis for ADM includes its consistency in providing shareholders with a reliable income stream, even through various economic and commodity price cycles. The company has also returned significant capital through the combination of share repurchases and dividends, totaling $3.3 billion in 2024 and $3.7 billion in 2023. With an average cost per share of $43.90, the stock has appreciated roughly 10% since the investment began. The plan is to maintain the current position and wait for more opportunity later.

Previously, we covered a bullish thesis on Archer-Daniels-Midland, on Value Investing Subreddit Page by Individual_Ad5883. The current summary by Tyler Pellom presents a new thesis. Archer-Daniels-Midland (ADM) is a global leader in human and animal nutrition, with a vertically integrated model allowing it to manage agricultural commodities. The company’s diverse segments contribute to overall business resilience. The investment thesis for ADM includes its consistency in providing shareholders with a reliable income stream and returning significant capital through dividends and share repurchases. The stock has appreciated roughly 10% since the investment began.

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Disclosure: None. This article was originally published at Insider Monkey.